Brazil awarded a $4.5
billion contract to Swedish Saab to replace its aging
fleet of fighter jets, a surprise coup for the Swedish company
after news of U.S. spying on Brazilians helped derail Boeing's
chances for the deal.

The contract, negotiated over the course of three
presidencies, will supply Brazil's air force with 36 new Gripen
NG fighters by 2020. Aside from the cost of the jets themselves,
the agreement is expected to generate billions of additional
dollars in future supply and service contracts.

Saab did not immediately comment on the purchase.
In addition to Chicago-based Boeing Co With its F-18 Offer and France's Dassault
Aviation SA with its Rafale was a contender for the contract.

The timing of the announcement, after more than a decade of
off-and-on negotiations, appeared to catch the companies
involved by surprise. Even Juniti Saito, Brazil's top air force
commander, said on Wednesday that he only heard of the decision
a day earlier in a meeting with President Dilma Rousseff.

Brazilian officials said the deal, one of the most coveted
emerging-market defense contracts, went to Saab because it
provided the most affordable option for the new jets, as well as
the best conditions for technology transfer to local partners.

The choice, Defense Minister Celso Amorim said, "took into
account performance, the effective transfer of technology and
costs - not just of acquisition but of maintenance."Until earlier this year, Boeing's F/A-18 Super Hornet had
been considered the front runner. But revelations of spying by
the U.S. National Security Agency in Brazil, including personal
communication by Rousseff, led Brazil to believe it could not
trust a U.S. company."The NSA problem ruined it for the Americans," a Brazilian
government source said on condition of anonymity.

A U.S. source close to the negotiations said that whatever
intelligence the spying had delivered for the American
government was unlikely to outweigh the commercial cost of the
revelations.